BREAKING STORY: Kiir signs suspicious oil agreements to turn around
fortunes of economy
Apr. 15 Featured, Uncategorized no comments
By: JULIUS BARIGABA, TheEastAfrican, APR/15/2017, SSN;
The South Sudanese government is signing deals with suspected
wheelerdealers, some of whom may be out to take advantage of Juba’s
financial crisis.
In less than four months, President Salva Kiir, who is presiding over
a cashstrapped economy torn apart by a conflict that is teetering
towards genocide, has received offers from agents of established
companies, organisations and non-descript financing groups, all
dangling deals worth billions of dollars that critics warn will
mortgage the country and its resources for generations.
Critics in Juba worry that President Kiir’s desperation to get cash
may push him into the hands of outright conmen and that even genuine
companies could take advantage to secure sweet deals for themselves
while leaving the country with peanuts.
International fixers are reportedly operating out of the regional
capitals of Kampala, Nairobi, Addis Ababa as well as other African
cities and some European capitals, setting up meetings between the
president himself and other top government officials — the Juba teams
are only too willing to go along.
First in was the Luxembourg-based investment fund Suiss Finance
Luxembourg AG, which towards the end of 2016 made an offer of €10
billion ($10.5 billion) that could rise to €100 billion ($105
billion), to finance projects through joint ventures in
infrastructure, transportation, oil and energy.
IN SUMMARY:
International fixers are reportedly operating out of the regional
capitals of Kampala, Nairobi, Addis Ababa as well as other African
cities and some European capitals.
Juba government is looking to new entrants and deals in its oil
sector to boost oil production and provide an escape route from empty
coffers.
READ:
Hope for South Sudan as fund offers President Kiir $105b budget support.
President Kiir’s critics and Sudan observers immediately flagged this
deal after it was publicised in the media.
A South Africa-based South Sudan academic familiar with goings-on in
Africa’s youngest country warned the deal was bogus. Refusing to give
his name for fear of endangering his family still trapped in the
intricate war in the south of the country, the academic challenged
journalists to dig deeper into the deal.
Investigations conducted by this newspaper revealed that shadowy
Kampala businessmen had brokered the deal but efforts to get one of
the principals to speak on it were futile as multiple phone numbers
given as his contacts were unavailable.
On March 6, Juba signed a deal with Oranto Petroleum to invest $500
million in the country to develop South Sudan’s oil in Block B3
covering 25,150 square kilometres, paving the way for the oil
company’s “comprehensive exploration campaign, starting immediately.”
South Sudan’s Ministry of Petroleum and Oranto Petroleum signed the
exploration and production sharing agreement for the block, in which
Oranto will be the technical operator and 90 per cent shareholder,
while the Juba government’s Nile Petroleum (Nilepet) takes a 10 per
cent stake.
The EastAfrican could not confirm with the South Sudanese embassy in
Kampala, if the cash from any of these deals has come through as
Ambassador Samuel Luate was reportedly out, attending a meeting, and
the only official in the mission was “not in line to speak about the
matter.”
Mr Luate’s office promised to respond later, but by press time had not
returned our calls.
Another deal on oil and gas collaboration was signed on March 20, this
time with Equatorial Guinea, to share knowledge and resources, promote
investment and for Equatorial Guinea to provide training to South
Sudanese personnel and advise on licensing as Juba’s current licensing
round nears conclusion.
Details on the progress and execution of these offers so far remain
scanty, although the Oranto deal has attracted the most criticism in
Juba.
Apparently, technical officials in the Ministry of Petroleum compiled
and handed over a report to Petroleum Minister Ezekiel Lul Gatkuoth,
indicating that Oranto lacked both the technical expertise and
financial capacity to handle 90 per cent of the block.
In spite of the report, critics indicate that powerful figures and
wheelerdealers in Juba were holding the government to ransom and
pushing for the deal to be signed, regardless of any amount of
criticism and queries over Oranto’s transparency and capacity.
Prince Arthur Eze, founder and chairman of Oranto Petroleum said his
company is “at the vanguard of African firms exploring and developing
African assets” but also hinted that the company would collaborate
with “our partners to bring to light the immense potential of Block
B3.”
Oranto is a subsidiary of Atlas Petroleum International Ltd, both
forming the Atlas Group, a wholly owned Nigerian private firm.
“We believe the petroleum resources of Block B3 are vast. To reach our
target of more than doubling current oil production, we need committed
new entrants like Oranto,” said Mr Gatkuoth.
The sister companies of the Atlas Oranto Group own and operate 20 oil
and gas acreages in 10 African countries in Benin, Côte d’Ivoire,
Equatorial Guinea, Ghana, Liberia, Namibia, Nigeria, São Tomé and
Príncipe, Senegal and South Sudan. Founded in Nigeria in 1991, the
group is Africa’s largest domestic explorer by acreage.
But in a number of countries, Oranto has been cited in irregular deals
that enabled it to get oil deals over the line, usually, acting as a
middleman for big oil companies to whom it sells its exploration
rights later on.
In 2006 and 2007, a report by the Liberian Auditing Commission named
Oranto in a bribery scandal for allegedly paying a total of $118,400
to legislators as the company sought parliament’s approval to grant it
the right to develop or sell concessions to bigger oil companies.
Oranto had negotiated production sharing contracts for three out of
four concessions with the National Oil Company of Liberia (NOCAL) but
the company needed parliament to ratify them before it could sell to
another party, hence the bribes.
Rights to sell concessions
Once the lawmakers were handed the sweeteners, Oranto was granted the
right to sell its three concessions to Chevron in 2010, and as of
2012, the US oil giant owned a 70 per cent stake in each of Oranto’s
offshore blocks.
Industry watchdog Global Witness also says NOCAL awarded Oranto
concessions without the oil prospecting firm ever putting in a bid,
while in Mali, Oranto’s was one of a dozen exploration agreements
cancelled in 2014 over “various offences.”
The manner in which the Nigerian firm acquired exploration blocks in
Sao Tome and Principe was also characterised by irregularities.
By press time, Oranto had not responded to The EastAfrican over the
issues of lack of transparency and the risks in investing in
conflict-ridden South Sudan.
Yet the Juba government is looking to these new entrants and deals in
its oil sector to boost oil production and provide an escape route
from empty coffers.
“The government is working hard to reinvigorate the petroleum industry
in South Sudan by creating an enabling environment for international
oil and gas companies to invest and operate. It is up to the oil
companies to come in, explore and produce. Partnership is what fuels
the oil industry,” said Mr Gatkuoth. END
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